CHAPTER 6

MONITORING AND
CONTROL
 MONITORING

 Monitoring refers to the timely gathering of information to review of project

implementation.
 It is on-going management review key factors of project implementation
performance.
 It aims to ensure that project inputs, schedules, outputs and other actions
are proceeding according to the project plan.
 It is done during the project implementation phase.
 It is concerned with results.
 PURPOSE OF MONITORING

 Monitoring provides information that will be useful in analyzing the situation

of the project. i.e. measuring its status
 Determining whether the inputs/ resources in the project are well utilized
 Identifying problems facing the project and finding its solutions in advance
 Ensuring all activities are carried out properly by the tight person at the right
time
 Determining whether the way the project was planned is the moist
appropriate way of solving the problem in hand
 Evaluation

 Evaluation is an objective and systematic judgmental process for

determining relevance, implementation, efficiency, effectiveness and
impact of project performance.
 It is assessment of project during and decision making. It is an external
activity in the project.
 Evaluation is done to improve project implementation and to improve
future project planning.
Objectives of Evaluation

 To verify whether the project implementation progress is as planned

 To take corrective measures for deviations in performance.
 To ascertain that actual costs are within the budgets.
 To ensure that quality standards are being attained.
 To identify unexpected problem areas and manage them.
 To bring about overall improvement in project performance to achieve
project objectives.
Evaluation Types

Conducted during the implementation phase. Its

On Going purpose is to correct deficiencies as they occur to
improve project performance.

It is carried out mid-way during implementation. Its

Mid-Term purpose is to improve implementation.

It is conducted after project completion. it provides

Terminal lessons for future project planning.

It is conducted some years after project completion

Ex Post to evaluate the impact of the project
 CONTROLLING
 Controlling is the management function of comparing the actual achievements with
the planned ones at every stage and taking necessary action, if required, to ensure
the attainment of the planned goals.
 It ensures that the right things are done in the right manner and at right time.
 Control is managerial process. It is interrelated with planning. Planning provides
standards for control.
 Control is a continuous process. To be effective, it should give attention to critical
control points or benchmarks where deviations adversely affect the attainment of
targets.
 3 Step Processes of Controlling

Measuring: Determining through formal and informal reports the degree to which the
progress towards objective is being made

Evaluating: Determining cause and of possible ways to act upon significant deviations
from planned performance

Correcting: Taking control action to correct an unfavorable trend or to take advantage

of an unusually favorable trend

Measuring

Correcting Evaluating
 Types of Control

Pre-control Concurrent
Post Control
control

• Transformation based
• Output based
• Initiated during the
• Input Based • Initiated after the
implementation of
• Initiated Before the start completion of the
activity
of activity activity
• It consist of actions to
• Examples: • Based on the feedback
ensure that the
Specifications, of performance results
operations are being
budgeting methods, • Example: Financial
conducted acc to plan
analysis
• Example; quality control
Project Control Cycle

Setting
Standards

Corrective
actions Goals Measuring
performance

Finding and
analyzing
Deviations
Elements of Control
 Time/Schedule Control

Normal Time control: It is the estimated time for completion of an activity. Increase
beyond this time is not likely to result in cost reduction.

Crash Time Control: It is the estimated time of completion of an activity which cannot be
reduced further irrespective of cost considerations.

Bar Charts and Network analysis are used to control Schedules.

 Quality Control

• Quality Control is Checking errors during project implementation.

• Quality control Inspectors are used for Quality checking.

• Project outputs not meeting the standards are rejected, scrapped or reworked.

• Elements of Project Quality are: Management process, Quality Planning, Quality

assurance, Quality control
 Cost Control

Cost control may be broadly defined as the process of controlling the expenditure in a
project at all stages from its inception through its development.

Cost control is not only "monitoring" of costs and recording perhaps massive quantities
of data, but also analyzing the data in order to take corrective actions before it is too
late.

Cost control implies good cost management, which must include-

• Cost estimating
• Cost accounting
• Project cash flow
• Company cash flow
• Direct labor costing
• Overhead cost
• Others such as incentives, penalties and profit sharing
 General Methods of Cost Control

1.Short Term planning and control

2. Accounting methods of control
3. Project Cost Models(S-curves)

1. Short term planning and control:

In this method project is broken down in much smaller components and short term plan
for in this or even days are prepared. Such plans are easy to evaluate and monitor. Also
since short term plans have lesser degrees of uncertainties, there is very chance of
project being controlled effectively.

2. Accounting Methods for Cost Control:

There are different ways to track costs in accounting, but most of them only provide
past records and are not very useful for ongoing projects. Some common methods
include:
a) Overall Profit/Loss Account
• This report is made after a project is finished.
• It shows whether there was a profit or loss and explains why.
• The information helps in planning future projects.
• Mostly used for small projects.

b)Profit/Loss at Different Stages

• Instead of waiting until the end, reports are made at different times while the
project is running.
• This is useful for large projects to track financial performance at various stages.

c) Unit Costing
•The cost of each unit of work (e.g., per cubic meter of earthwork or
concrete) is checked.
•The actual cost is compared with the planned or agreed price.
•This helps determine if each item is making a profit.
 3. Project Cost Curves(S-curves)/ Earned Value Analysis

EVA is a way to measure the amount of work actually performed on a project (i.e.,
to measure its progress) and to forecast a project's cost and date of completion.

The method relies on a key measure known as earned value (also known as
budgeted cost of work performed or BCWP).

This measure enables one to compute performance indices for cost and
schedule, which tells how the project is doing relative to its original plans.

These indices also enable one to forecast how the project will do in future.

Earned value actually uses three data values:

BCWS - Budgeted Cost of Work Scheduled
ACWP - Actual Cost of Work Performed
BCWP - Budgeted Cost of Work Performed
BCWS - Budgeted Cost of Work Scheduled
This the total budgeted/ planned /estimated /targeted /projected cost up to
the analysis dates. It answers the question "how much did we plan to spent as
of this date"

ACWP - Actual Cost of Work Performed

This is actual cost to accomplish all the work completed upto analysis date.
It answers the question "how much have we actually spent"

BCWP - Budgeted Cost of Work Performed

It tells us how much work has been completed in terms of the budgeted
amount.
Variances Formula Interpretation
Cost Variance CV=BCWP-ACWP If CV is +ve, cost under run( actual budget
expense is less than planned)
If CV is –ve, cost overrun(actual budget
expense is greater than planned)
If CV is 0 , No Cost varaince
Schedule variance SV= BCWP-BCWS f SV is +ve, Schedule under run (actual
schedule is ahead of planned)
If SV is -ve, Schedule overrun (actual schedule
is behind of planned)
If SV is 0 No Schedule variance (actual
Schedule is equal to planned)
Variance Expressed in Formula Interpretation
Percentage
Cost overrun (under 𝐵𝐶𝑊𝑃 − 𝐴𝐶𝑊𝑃 Over budget or under
𝑋 100
run)% 𝐵𝐶𝑊𝑃 budget expressed in
%, by what % does the
cost under run or over
run
Schedule overrun 𝐵𝐶𝑊𝑃 − 𝐵𝐶𝑊𝑆 Behind or ahead
𝑋 100
(under run)% 𝐵𝐶𝑊𝑆 schedule expressed in
% does the schedule
under run or over run
Cost Trends(Index) Formula Interpretation
Cost performance index CPI=𝐵𝐶𝑊𝑃 If CPI ≥ 1, Better
𝐴𝐶𝑊𝑃
Performance for Cost,
less budget
If CPI < 1, Poor
Performance for Cost,
more budget
Schedule performance 𝐵𝐶𝑊𝑃
SPI= 𝐵𝐶𝑊𝑆 If SPI ≥ 1, Better
index Performance in
Schedule, ahead of
schedule
If SPI < 1, Poor
Performance in
Schedus, behind of
schedule
Cost Trends(Forecast) Formula
Estimate at Completion EAC=
𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑗𝑒𝑐𝑡 𝑐𝑜𝑠𝑡
𝐶𝑃𝐼
Schedule at completion SAC=
𝑂𝑟𝑖𝑔𝑖𝑛𝑎𝑙 𝑝𝑟𝑜𝑗𝑒𝑐𝑡 𝑑𝑢𝑟𝑎𝑡𝑖𝑜𝑛
𝑆𝑃𝐼
Er. Gautam was responsible for 125m³ of concreting to be done in 10 days within
expenditure of Rs. 12,50,000. At the end of 3rd day, he managed to complete 40
cum. of concrete work with the expense of Rs. 3,75,000. Perform EVA and comment
on his performance.
Solution: Total work = 125m³ of concreting
Total project duration = 10 days
Total project cost = Rs. 12,50,000
Monitoring date = 3rd day from start of work
Work completed at this date = 40m³ of concreting
Expenses for completed work so far = Rs. 3,75,000

Budgeted Cost for work scheduled (BCWS):

1250000
cost of concreting per day= 10 = 125000
schedule cost for 3 days= 3 x 125000= 3,75,000

Budgeted Cost for work Performed (BCWP):

1250000
cost of concreting per cum= 125 =10,000
Budgeted Cost for work Performed = 10,000x40= 4,00,000
(This is the value earned from work performed)
Actual Cost of Work Performed (ACWP)
Actual expenses of work performed up to monitoring date= Rs. 3,75,000
Now,
Variances
Cost variance (CV) = BCWP – ACWP
= 400000 - 375000 = 25000 (+ Ve)
Under budget [Less spending than plan]
Schedule variance (SV) = BCWP – BCWS
= 400000 - 375000 = 25000 (+ve)
A head of schedule
Indices
CPI (cost performance index) = BCWP/ACWP=4,00,000/3,75,00
=1.06>1(Under budget)
SPI (Schedule performance index)= BCWP/BCWS= 4,00,000/3,75,000
=1.06>1(ahead of schedule)
Variances in %
𝐶𝑉 25000
Cost variance(%)=𝐵𝐶𝑊𝑃= 400000=6.25%
𝑆𝑉 25000
Schedule variance(%)= 𝐵𝐶𝑊𝑆= 375000= 6.67%
Here, cost is spending less than budget by 6.25%, where schedule is ahead by
6.67%
Forecast
Total project cost 1250000
Estimate @ completion (EAC) = = 1.06 = 1179245
𝐶𝑃𝐼
Total project duration 10
Schedule @ completion (SAC) = 𝑆𝑃𝐼
= 1.06
= 9.43 days

Variances @ completion
(VAC) cost = scheduled cost – EAC
=12,50,000-11,79,245= 70754.72
(VAC) schedule = Schedule duration – SAC
=10-9.43 = 0.57 day